Up to 252 new homes will be built on the 53,002 square metre site bounded by La Perouse Street and Monaro and Cygnet Crescents, with tenders now open for its sale.

The buyer can build up to 26 detached houses, 82 terrace houses with separate titles and between 83 and 144 units.

They will replace the 144 public housing units which were built in the 1960s.

The public housing precinct is one of 13 being sold off and redeveloped as part of the federal government's asset recycling program.

The site was rezoned for high density developments last February but the height limit was reduced from six to four storeys in April after community outcry.

Melissa Bennett of the Red Hill Residents Group said there were pro's and cons about selling off the land as an Englobo parcel.

"On the positive, it s a holistic approach to the development but the flipside is one developer has a large amount of influence and a higher ability to stray from the estate development plan," Ms Bennett said.

"There's still a degree of skepticism as to whether the community EDP process will be honoured and there are mixed views about its effectiveness. If it's effective it holds promise for positive future engagement opportunities but the proof will be in the DA and in the final product."

Ms Bennett said the plans for up to 252 homes was a "significant improvement" on the original plans for 600 units.

"No doubt the community consultation has had an impact and the government listened," she said.

However Ms Bennett remained concerned about the expected spike in activity as a result of the redevelopment.

A traffic report showed the redevelopment would add a "noticeable amount of additional traffic" - an extra 1016 trips per day, including another 102 trips during peak hour.

"It's gone from 144 homes to 242 which is a significant increase. Traffic and street parking will be the next challenge," Ms Bennett said.

"A traffic study showed some roads were overcapacity. Those are the sorts of thing that need to be questioned and hopefully the DA process is going to do that in a comprehensive way.

"There's been scepticism about how traffic has been handled in the past. Talking to people, it's been done development by development and treated in complete isolation."

Ms Bennett hoped the impact on traffic and other services would be probed as part of the development application process.

"This is such a rare opportunity for inner south with huge potential but it could have a significant impact on suburb if it's done poorly," she said.

The redevelopment also exposed the need for a master plan for the inner south region, she said.

We've been arguing for one for a number of years now. It gives the community confidence these decisions are not being made in isolation," Ms Bennett said.

Colliers and JLL are taking tenders for the sale until March 1.

Real Estate Institute ACT director Craig Bright said the sale would likely be "hotly contested" by the largest developers in town.

"It's been coming for a long time and this is a fairly unique circumstance," Mr Bright said.

"There's not a lot of infill in Red Hill and people's options are limited in terms of staying in the suburb if they want to downsize.

"Based other sites sold in the inner north and inner south I expect it to go for a premium."

Mr Bright said it was likely the buyer would develop the site in stages over a number of years.

He expected the development would be "very closely watched".

"Ultimately, this will be very good for the suburb if it's done well," Mr Bright said.

"At the end of the day whoever acquires the site will do it well because it's in their interest to do so. People will be fairly discerning about what they will and won't buy.

"[Because of the area] you'll be dealing with professionals and sophisticated buyers who've maybe bought five or six properties before. They're going to be quite critical about what product they're going to buy."